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This report assesses the opportunity offered to Carol's Cookies by the order for 20,000 boxes of Crunchies by a supermarket chain.
Member rating: No Rating | Words: | Submitted: Mon Jun 19 2006
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EXECUTIVE SUMMARY This report assesses the opportunity offered to Carol's Cookies by the order for 20,000 boxes of Crunchies by a supermarket chain. The report compares both the short term and long term by using two costing methods - relevant costing and full costing. Using relevant costing it has been shown that purely on a financial basis accepting the order in the short term will increase relevant cash flow by £105,000, even with the loss of revenue and production of 6,000 boxes of Boosters. This is due to having 60 tonnes of Material B in stock and the under utilisation of Labour Grade 1. However, the weight of the short term financial gain must outweigh any risks associated with the reduced production of Boosters. In the long term the full costing approach shows Crunchies being sold at a loss. A repeat order would improve both the OAR and the utilisation of the Labour...
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